LOS ANGELES, CA -- Los Angeles County Superior Court is awarding Allstate Insurance Company more than $7 million in a qui tam action filed by the insurer on its behalf and on behalf of the People of the State of California against a Long Beach chiropractor, Daniel H. Dahan, D.C., and his business, Progressive Diagnostic Imaging, Inc., arising out of a scheme to defraud insurance companies.

In the judgment, Superior Court Judge Ernest M. Hiroshige found that Dahan and Progressive Diagnostic Imaging violated the state's Insurance Frauds Prevention Act in 487 claims presented to Allstate in radiology reports that were determined to be "falsified medical records" that "have no diagnostic, clinical, or medical value whatsoever." Hiroshige further concluded that health insurance claim forms and billing statements submitted in connection with the falsified radiology reports were "false and fraudulent."

The judge ordered that Dahan pay Allstate $4,870,000 in civil penalties, $918,516.78 in assessments and $1,222,151.62 in attorney's fees, costs and investigative expenses--$7,010,668.40 in all.

Allstate alleged that Dahan purchased report-writing software that purported to analyze x-rays and form medical opinions and diagnoses, including opinions concerning permanent impairment ratings, and thereafter formed Progressive Diagnostic Imaging to solicit x-rays from chiropractors, with the assurance that "board certified radiologists" would analyze the films.

Allstate further claimed that, unbeknownst to patients and health care providers using Progressive Diagnostic Imaging, Dahan recruited untrained and unlicensed individuals to work with the report-writing software to prepare the fraudulent radiology reports. To make it appear that the reports were genuine, Dahan instructed his "technicians" to cut and paste the signatures of board certified radiologists to the reports, all without the knowledge, approval or authorization of the radiologists. The reports and bills were presented to Allstate in support of claims, either directly by Dahan and Progressive Diagnostic Imaging or by plaintiff attorneys in auto accident cases.

At trial, four radiologists, whose names appeared on reports, testified they never wrote, reviewed, approved or signed the reports.

Beyond the verdict, Hiroshige also issued an injunction prohibiting Dahan from owning, operating or working as an employee in any business engaged in the practice of medicine. And he ordered that letters be sent to all of the affected patients and their referring healthcare providers, to advise them of the Court's findings and judgment, including the Court's order that the reports generated by Dahan and Progressive Diagnostic Imaging are "to be disregarded on the basis that such reports [are] . . . falsified medical record[s]" and have "no diagnostic, clinical or medical value whatsoever," and that "records are not to be considered by any person or entity as part of the . . . patient's medical history, medical record, or medical chart at any time and for any purpose."